15 Apr 2014
Good prospects of a EUR/USD top while below 1.3898 - JPMorgan
FXStreet (Bali) - According to John Normand and Thomas Anthonj, FX Strategists at JP Morgan, prospects of the EUR/USD having found a top remain good as long as 1.3898 is not broken decisively.
Key Quotes
"The big question whether a countertrend rally top is already in place at 1.3967 remains unanswered for the time being. The prospects of this being the case are however remaining good as long as 1.3898 (minor 76.4 %) is not broken decisively."
"That said and in order to confirm the countertrend rally top, it takes two consecutive lower daily closes (10pm CET) of the red lagging line below the cloud (at 1.3646 today). Such a break would also break the row of higher lows at 1.3673 which would then open the way for a test of the last major bottom at 1.3477 and of weekly trend line support at 1.3311. Breaks below these supports would provide the final evidence that the countertrend rally from the mid 2012 low a 1.2042 had indeed reached its exhaustion point at 1.3967 last month."
"Below 1.3311 we’d see lower trend line support at 1.2862 (weekly), if not the 76.4 % retracement on higher scale at 1.2496, in focus. A decisive break above 1.3898 would on the other hand call for an extension to the next major T- junction at 1.4259 (76.4 % on higher scale).
"In the short-run we are looking for a range breakout between 1.3673 (last intra-day low) and 1.3898 (minor 76.4 %) as such a breakout would provide early indications whether the countertrend rally could potentially be extended to 1.4259/83 (76.4 % on big scale/pivot) or expose the first crucial support zone between 1.3646 and 1.3616 (daily Ichimoku- lagging/daily trend)."
"A break below the latter would then challenge this years low at 1.3477 which if taken out would break the row of higher lows on big scale and thus constitute a game change. Only a decisive hourly close above 1.3898 (i.e. above 1.3930) would temporarily put the odds in favor of the EUR bulls."
Key Quotes
"The big question whether a countertrend rally top is already in place at 1.3967 remains unanswered for the time being. The prospects of this being the case are however remaining good as long as 1.3898 (minor 76.4 %) is not broken decisively."
"That said and in order to confirm the countertrend rally top, it takes two consecutive lower daily closes (10pm CET) of the red lagging line below the cloud (at 1.3646 today). Such a break would also break the row of higher lows at 1.3673 which would then open the way for a test of the last major bottom at 1.3477 and of weekly trend line support at 1.3311. Breaks below these supports would provide the final evidence that the countertrend rally from the mid 2012 low a 1.2042 had indeed reached its exhaustion point at 1.3967 last month."
"Below 1.3311 we’d see lower trend line support at 1.2862 (weekly), if not the 76.4 % retracement on higher scale at 1.2496, in focus. A decisive break above 1.3898 would on the other hand call for an extension to the next major T- junction at 1.4259 (76.4 % on higher scale).
"In the short-run we are looking for a range breakout between 1.3673 (last intra-day low) and 1.3898 (minor 76.4 %) as such a breakout would provide early indications whether the countertrend rally could potentially be extended to 1.4259/83 (76.4 % on big scale/pivot) or expose the first crucial support zone between 1.3646 and 1.3616 (daily Ichimoku- lagging/daily trend)."
"A break below the latter would then challenge this years low at 1.3477 which if taken out would break the row of higher lows on big scale and thus constitute a game change. Only a decisive hourly close above 1.3898 (i.e. above 1.3930) would temporarily put the odds in favor of the EUR bulls."